Module No: BAA6003

________________________________________________________

ASSESSMENT DATE: Week Beginning 11 March 2024

Scenario 5

TIME ALLOWED: 25 minutes

________________________________________________________

Learning Outcomes:

Students should be able to:

 Understand the advanced theory and practice of auditing practice and
procedures.
 Analyse and apply different audit approaches to structured and
unstructured problems.

BAA6003 Coursework 2024 Page 1

INSTRUCTIONS:

In your team prepare a presentation on Happy Memories Ltd,

answering the parts (i) to (iii). You will have a maximum time
allocation of 15 minutes per group (excluding questions).

Following your presentation, your team will be asked additional

questions, so ensure that you make yourself aware of all relevant areas,
not just the area you are presenting on.

How you allocate the work to be presented is up to you, but bear in mind
that there are marks allocated for team work.

If a team member is asked a question to which you are able to add

supplementary, relevant information, then additional marks will be
allocated to you.

Marks will be allocated as shown in the table below:

Presentation Additional questions

40% content (slides and 30% if additional
verbal) question answered well
15% presentation style 15% extra marks if
supplement answer to
team mates question

The marking scheme that will be used to assess your presentation forms
part of this document. This coursework represents 50% of your final
module mark.

All groups will be recorded, for IV purposes.

The lecturer will need an electronic copy of your Powerpoint

presentation before your presentation. This should reach the lecturer no
later than Friday 15 March 2024 by 11am, via Turnitin on Moodle.
You will not be able to alter the presentation after this date and it will be
the copy the lecturer holds that you will use for your presentation.

BAA6003 Coursework 2024 Page 2

Happy Memories Ltd (Happy) makes personalised metal pendant
jewellery using finger prints or other memorabilia. The customer visits
one of the 130 fitting studios which are located nationwide. A mould is
created for the customer, who chooses the metal and design of the
pendant. Payment is taken by credit card or cash at the time of the
fitting. The customer leaves their address details with the studio and
within a week the jewellery is dispatched to the customer.

In total, Happy has 450 weekly paid employees on its payroll.

Permanent employees work a standard number of hours per week
according to their individual contracts. Happy’s payroll department is
based in the head office in Carmarthen. The primary payroll clerk is
Junaid. When Junaid is absent due to illness or annual leave, the sales
clerk, Suzi takes on Junaid’s payroll responsibilities in addition to her
existing role. The payroll system is accessed using a password which is
known only to Junaid and Suzi.

New employees are provided with their contract of employment by HR.

The standard hours per employee are automatically recorded in the
payroll system once the employee begins working for Happy. Junaid
sets up all new employees’ bank details on the payroll system when
notified by HR. Junaid or Suzi increases the wage rate by the rate of
inflation each year, by amending the standing data.

During busy times, overtime hours are available for those employees
available. Employees record any overtime worked on weekly overtime
sheets which are scanned and emailed to Junaid at the head office.

Junaid collates the data on a weekly basis from the overtime sheets and
inputs into the relevant employee’s payroll record. Using the standard
hours worked plus the overtime hours, the payroll system automatically
calculates the gross and net pay plus the relevant deductions. Junaid
generates a printout of each payroll on a monthly basis. This report is
very detailed and itemises the number of hours paid, split between basic
and overtime, gross pay, pension deductions, net pay and employer’s
tax for each individual employee and by fitting studio. Due to the
demands of generating a payroll on a weekly basis, Junaid does not
have time to check these calculations.
BAA6003 Coursework 2024 Page 3
On a weekly basis, Junaid runs three reports; a summary report which
indicates the cumulative details to date for each employee. An auto pay
list is also generated which lists for each employee the bank sort code,
account number and net pay per employee, and total net pay. Finally the
payslips report is run which lists details of gross pay, deductions and net
pay.

Junaid authorises the details to be submitted to the bank for payment

using a different password, also known by Suzi. Once the bank has paid
the employees, it electronically sends Happy a printout, listing bank and
net pay details per employee together with the net pay total. Junaid then
files these reports according to the date of payment. At the end of each
week’s payroll process, Junaid backs up payroll details onto a USB stick
which he keeps in a drawer in his desk.

Junaid has been with the company for a long time and if any of the
employees leaves the company, they will ring him to let them know their
leaving date. He takes this opportunity to tell them the amount of
accrued holiday pay that will appear in their final wage packet, if
relevant.

The nominal ledger is updated on a monthly basis by Junaid who posts

the cumulative total of the weekly payroll summaries. At the same time,
he extracts the tax details from the weekly payroll summaries and
records the monthly figures on the taxation authorities’ payslip. The
Finance Director, Mrs Yi, signs a cheque for the appropriate amount,
based upon the taxation authorities’ payslip and Junaid puts it in the
post.

You are employed by Robinson & Co, who are Happy’s external
auditors. Your team has just finished its audit of Happy and the
engagement partner has requested you present the results of your work
to date on the following areas:

Required:

i Identify the objectives of exercising internal controls in a payroll

system and discuss the extent to which the procedures exercised
by Happy achieve these objectives; outlining both the strengths
and weaknesses.

BAA6003 Coursework 2024 Page 4

ii Describe the procedures which would strengthen Happy’s payroll
system.

Iii Evaluate the procedures you used to obtain evidence during your
audit of Happy, as prescribed by the relevant accounting
standards; including analytical review, reconciliation, inquiry,
inspection, observation and recalculation.

BAA6003 Coursework 2024 Page 5

Marking scheme

As a group member

1. Did the presentation have a logical structure – an introduction, main body and conclusion?
Not evident Weak Satisfactory Good Very Good
0 1 2 3 4

2. Was the presentation (excl. questions) to the point and timeliness adhered to?
More than 15 minutes or less 5-6 min or 7-10 min Between 11-15
than 5 minutes 16-17 min min
0 2 3 4

3. Was the font large enough to be read and the slides not overcrowded?
Not evident Weak Satisfactory Good Very Good
0 1 2 3 4

4. Did the audit work performed clearly identify internal controls?

Not evident Weak Satisfactory Good Very Good
0 1 2 3 4

5. Were the weaknesses clearly outlined?

Not evident Weak Satisfactory Good Very Good
0 1 2 3 4

6. Were the recommendations appropriate to remedy the weaknesses?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 4

7. Was there evidence that six evidence collections methods were clearly understood?

Not evident Weak Satisfactory Good Very Good

0 2 6 9 12

BAA6003 Coursework 2024 Page 6

8. Was there evidence that the presentation was performed in a cohesive manner, that
indicated the group had worked together?
Not evident Weak Satisfactory Good Very Good
0 1 2 3 4

As an individual
9. Was body language appropriate? e.g. eye contact, smile
Not evident Weak Satisfactory Good Very Good
-1 1 2 3 5

10. Was the dress code appropriate?

Weak Satisfactory Good Very Good
-1 3 4 5

11. Did the student speak clearly, confidently, concisely and at an appropriate speed?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 5

12. Was the student’s additional question answered in a manner which displayed the
question was understood and relevant information brought in to support the answer?

Not answered Weak Satisfactory Good Very Good

0 5-14 15-19 20-24 25-30

13. Did the student supplement a team member’s question?

Not evident Weak Satisfactory Good Very Good

0-1 2-5 6-7 8-10 11-15

Mark out of 100 =

BAA6003 Coursework 2024 Page 7